Financial Accounting Report: Heritage and Biological Assets Analysis

This report delves into the intricacies of financial accounting, specifically focusing on heritage and biological assets. It examines the accounting standards, namely AASB 116 for heritage assets and AASB 141 for biological assets, and their practical applications. The report discusses the definition, recognition, measurement, and classification of heritage assets, including their valuation methods like contingent valuation, travel cost, and market-based valuation. It also covers the accounting for biological assets, such as agricultural products, and the application of fair value measurement. The report differentiates between heritage assets and assets typically held by private-sector entities, highlighting the unique characteristics and challenges associated with each type. Furthermore, the report addresses the classification and reporting of these assets in financial statements, including the challenges in measurement and the importance of fair value assessment for biological assets. The report concludes by summarizing the key aspects of accounting for both asset types, offering valuable insights into their financial reporting. The report also includes references to the accounting standards and related literature.

Running head: ADVANCED FINANCIAL ACCOUNTING
Financial Accounting
Name of the Student:
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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Heritage Assets................................................................................................................................2
Accounting for Heritage Assets...................................................................................................2
Valuation of Heritage Assets.......................................................................................................3
Biological Assets.............................................................................................................................3
Accounting for Biological Assets................................................................................................3
Common Example of Biological Assets......................................................................................4
Classification and Reporting of Financial Statements.................................................................4
Measurement of Biological Assets..............................................................................................5
Accounting for Agricultural Produced........................................................................................6
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

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Introduction
Accounting for Heritage Assets in accordance with the Accounting Standards Board (UK,
2006) can be well defined as an asset with the historic, artistic, geophysical or technological
qualities held and maintained which are primarily hold and maintained by the institutions are
specific because of the knowledge and culture contribution done by them. The recognition,
measurement and classification of the historical asset can be in specific to the AASB 116. Some
of the common form of heritage assets can be national parks, national monuments, museum and
libraries, which are unique, and substitute of the same is not found easily. These assets because
of their specific artistic creation cannot be easily created or replaced (Abbott, & Tan‐Kantor,
2018).
Accounting for Biological Asset can be done with the help of the AASB 141 as a
management by entity of the biological transformation of the biological assets, that are held for
sale for the purpose of agricultural production or additional biological assets. In terms of
defining the asset, the application of AASB 141 should be well applied for the production of the
Agricultural products and biological asset except for the bearer plants (Hu, Percy & Yao, 2015).
Discussion
Heritage Assets
Accounting for Heritage Assets
The heritage and cultural assets can be recognised and measured reliably in accordance
with the AASB 116. Heritage Assets acquired at minimal cost or for a minimum nominal cost is
necessarily to be recognised at the fair value at the date of acquisition for the company. Heritage

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and Cultural Assets, which are to be recognised in the financial statement, must provide expected
future economic benefits. Ownership of the asset must be well stated and transaction giving rise
to the control must already have occurred (Woon, Chatterjee & Cordery, 2019).
Future Economic Benefits: It is crucial to note that in association with the Heritage Asset these
lead to cash outflows in the form of expenses that are generally incurred by entities and it
provide desired services for the purpose of generation of future economic benefits.
Control of Heritage Assets: The control or the ownership of the Heritage Asset is the primary
concern that should be taken into consideration for the purpose of classification of assets. It
should be well known about, which entity controls the asset whether it is done by federal, state or
local government level (Pilcher, 2018).
Valuation of Heritage Assets
The approaches for valuation of the heritage assets of the company can be well done with the
help of the various methods like:
Contingent Valuation Method (CVM): The valuation method involves valuing a particular
resources based on the purchasing party willing to pay for the same asset.
Travel Cost Method (TCM): The Cost of the heritage asset can also be done with the help of
the costs that are generally incurred for the construction of the asset and particularly individuals
on the other hand who are willing to pay for the resources that are used for the construction of
the resources.
Market Based Valuation (MBV): The valuation of the property on the other hand could also be
done with the help of the market valuation of properties surrounding similar kind of properties.

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Biological Assets
Accounting for Biological Assets
The accounting standard that are applied for accounting of various agricultural activity like the:
 Biological Assets, except for bearer plants
 Products specifically related to Agricultural, which are at point of harvesting.
On, the other hand trees held as forestry operations, animals held as part of the livestock
operations, aquaculture are some of the key components of the Biological Assets and
recognised as per AASB 141 (Argilés-Bosch et al., 2018).
Application of the AASB 141 is not applied to products that are the results of the processing
after the harvest of the trees. In specific AASB 141 can apply to grapes (agricultural product)
but not to processed unit, which is the wine.
Common Example of Biological Assets

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Classification and Reporting of Financial Statements
 Reporting of the Biological Asset needs to be recorded separately in the financial
statement of the company i.e., the Balance Sheet of the company (Hana & Patrik, 2017).
 Classification and recognition of the biological asset as current or non-current asset
would be significantly dependent on the intentions of the Management.
Measurement of Biological Assets
The measurement of the biological asset cannot be significantly done using the historical cost
approach because of the following limitations:
 It ignores the accretion in the values which are based through the natural events.
 Price changes are generally neglected.
 Necessary information in terms of the assets are generally not provided when associated
with historical cost approach.
 There might be comparable forecast, which can be applied but with the application of the
historical cost, the same cannot be applied by the management of the company (Silva &
Nardi, 2018).
For the purpose of the valuation of the biological assets of the company the same should be
done with the help of recognising the fair value of the assets less any selling cost associated
with the product and the remaining value will be taken as the fair market value for the
biological assets of the company according to AASB 141. On the one hand, side assessing
the fair value of the biological asset can be difficult depending on the characteristics and
features of the asset. Fair value would be considered as the best appropriate value for the
reporting of the biological assets of the company. Gain or Loss, which are arising from the

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asset initial recognition of biological asset at the fair value less any costs associated with the
products (Bohušová & Svoboda, 2018).
Accounting for Agricultural Produced
Agricultural produced of biological asset as defined by AASB 141, as done with the help
of the harvested products of the entity’s biological assets. Fruit pulled from trees, wool shorn
from sheep and slaughtered livestock are some of the common forms included as Agricultural
Produced goods. In accordance with the AASB 102, the valuation of the inventory will be done
at the lower of cost or at net realisable value from the products.
Conclusion
Accounting for both the Heritage Assets and Biological Asset can be well done with the
help of the various accounting standard for the company. Classification and recording of the
asset can be well done with the help of the AASB 116 Accounting for Heritage Assets and
AASB 141 Accounting for Biological Assets were well stated with the help of the standards and
regulations mentioned.

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References
Abbott, M., & Tan‐Kantor, A. (2018). Fair Value Measurement and Mandated Accounting
Changes: The Case of the Victorian Rail Track Corporation. Australian Accounting
Review, 28(2), 266-278.
Argilés-Bosch, J. M., Miarons, M., Garcia-Blandon, J., Benavente, C., & Ravenda, D. (2018).
Usefulness of fair valuation of biological assets for cash flow prediction. Spanish Journal
of Finance and Accounting/Revista Española de Financiación y Contabilidad, 47(2),
157-180.
Bohušová, H., & Svoboda, P. (2018). Biological assets: impact of measurement on financial
position and performance of SMEs. In Forum Scientiae Oeconomia (Vol. 6, No. 2018)
Issue No. 1: Competitiveness of the modern organization: human, ethical and innovative
aspects, pp. 19-32). Wydawnictwo Naukowe Akademii WSB.
Hana, B., & Patrik, S. (2017). Will the amendments to the IAS 16 and IAS 41 influence the value
of biological assets?. Agricultural Economics, 63(2), 53-64.
Hu, F., Percy, M., & Yao, D. (2015). Asset revaluations and earnings management: Evidence
from Australian companies. Corporate Ownership and Control, 13(1), 930-939.
Pilcher, R. (2018). Depreciation in local government—still the problems continue. In Public
Sector Accounting, Accountability and Governance (pp. 30-42). Routledge.
Silva, R. M., & Nardi, P. (2018). The (in) Difference between Historical Cost and Fair Value for
Biological Assets: A Cross-Country Study.
Woon, P. P., Chatterjee, B., & Cordery, C. J. (2019). Heritage reporting by the Australian public
sector: Possibilities from the concepts of new public governance. Accounting, Auditing &
Accountability Journal.